How QB Mark Sanchez was sacked by a financial advisor
An adviser from a prominent Dallas-based wealth management firm allegedly steered millions of dollars from his pro athlete clients way, way out of bounds.
NFL quarterback Mark Sanchez and major league baseball pitchers Jake Peavy and Roy Oswalt were allegedly cheated out of about $33 million by Ash Narayan, who worked for RGT Capital Management for nearly 20 years, the SEC has charged.
Narayan "secretly siphon[ed] millions of dollars from accounts he managed for professional athletes," the SEC alleged.
The advisor, who was a managing director based in RGT's Orange County, Calif. office, invested the money into Ticket Reserve, a struggling online company on whose board he served, the SEC said in a release. The commission also announced that it has obtained a court order freezing Narayan's assets.
RGT Wealth Advisors, which does business as RGT Capital Management, has around $4 billion in assets under management and said in a statement that it was "outraged" by Narayan's conduct and "fully supports" the SEC filing.
"FRAUDULENT CASH INFUSIONS"
In a complaint filed on May 24 and unsealed today in federal court in Dallas, the SEC charged Narayan, of Newport Coast, Calif., along with Ticket Reserve, CEO Richard Harmon, and COO John Kaptrosky.
The Ticket Reserve became dependent on the "fraudulent cash infusions" from Narayan’s unsuspecting clients to stay in business, according to the complaint. In exchange, the SEC alleged, Narayan received nearly $2 million in hidden compensation from the company, most of it directly traceable to funds stolen from his clients.
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The Ticket Reserve also made "Ponzi-like payments to existing investors using money from new investors," the complaint charges. After being fired from RGT earlier this year and losing access to his clients’ accounts, Narayan redirected to Ticket Reserve the sham fees he received out of the money taken from client accounts, the SEC charged.
ADVISOR 'EXPLOITED ATHLETES'
“We allege that Narayan exploited athletes and other clients who trusted him to manage their finances," said Shamoil Shipchandler, director of the SEC’s Fort Worth regional office. "He fraudulently funneled their savings into a money-losing business and his own pocket.”
According to the court filing, Narayan and Sanchez, who is set to be the starting quarterback for the Denver Broncos this season, attended the same church in California. Sanchez said in the court filing he believed the advisor was a devout Christian and highly qualified and had his NFL paychecks deposited directly into a brokerage account.
Narayan also falsely claimed to be a CPA and failed to disclose key conflicts of interest, including that he was a member of Ticket Reserve’s board of directors and owned more than three million shares of company stock, the SEC alleged.
RGT said it had discovered earlier this year that Narayan had "directed a small number of clients to make investments that were not consistent with RGT's policies and procedures or the clients' investment goals. We voluntarily reported our findings to the SEC and took immediate corrective steps – including terminating the employment of Mr. Narayan."
RIA COOPERATING WITH SEC
The firm said it is "continuing to cooperate with the SEC" and has filed its own lawsuit in federal court in Chicago against certain members of the board and the CFO of Ticket Reserve, alleging that they “breached their fiduciary duties through conduct that amounted to gross mismanagement."
Harmon's attorney Lanny Davis said in a statement that "Neither Rick Harmon nor his chief operating officer, John Kaptrosky, did anything wrong while Mr. Harmon was CEO of The Ticket Reserve, and they and the company were in fact victims of someone else's alleged wrongdoing."
Harmon and Kaptrosky will "continu[e] to cooperate with the SEC to resolve this matter as soon as possible," Davis said.
The law firm representing Narayan did not return calls requesting comment on the case.